| Chapter 1: | The Chain Store Historically Considered |
He evaluated in a statistical model the influence of big chain retailers, grocers, and the political structure of the state. He found that dominance of groceries, not other general merchandise, was the leading influence fostering adoption of effective chain store taxes. Furthermore, he notes that although the taxes did not significantly affect nongrocery chain entrance, they did limit grocery penetration significantly. He concludes that “as there is considerable evidence that the grocery chains were a procompetitive force leading to lower food prices, these taxes could well have served to raise food prices” (Ross, 1986, p. 137). This is eerily familiar to the current debate about Wal-Mart.
It is tempting to give credence to the interest group voices that clashed in the localist and producerist versus consumerist notions advanced by Schragger. Perhaps it was the growing discontent of the farm lobby or the realization by manufacturers that chain stores helped their business. However, other factors emerged to crush the advance of the state-level chain store taxes. The first was the ultimately ineffective efforts at the federal level to rein in chain stores; the second was a world war.
Representative Wright Patman, whose home state of Texas had already enacted the toughest chain store GLT, brought that state’s fervor to the federal policy scene. Joining forces with Samuel Robinson, they crafted legislation that prohibited price discrimination across retailers that could not be justified by actual cost savings. This modification of the Clayton Act is widely regarded by economists as among the greatest misadventures of antitrust legislation. The effects of the passage appear to have been limited, and the great critic of Patman, Godfrey Lebhar, gives its impact but little notice. It is highly unlikely today that most retail store managers involved in buying have even the faintest knowledge of Wright Patman.
Rebounding from his victory in the Robinson-Patman Act, Patman proposed a federal GLT that was higher than Texas’ prohibitive rate. The proposed federal fee was so onerous that Business Week editorialized “Would you believe it, if you were to, that a congressman, and an influential congressman at that, had proposed that the Federal Government tax the F.W. Woolworth Co. about $9,000,000 a year?” (Lebhar, 1952, p. 242).